January’s blockbuster jobs report shocked Wall Street and defied predictions of a cooling labor market. But the headline number doesn’t paint the entire picture of the US economy.
Yes, the labor market grew at a much faster pace last month than forecast, but one key metric— average hours worked— declined, a trend economists say could be worrisome for the economy, since it could indicate changes in hiring trends.
“Companies that are hiring or keeping their employees are reducing their hours. Hours worked have declined in a way that you typically see around a recession,” Lakshman Achuthan, co-founder of Economic Cycle Research Institute, told Yahoo Finance Live.
A perfect example: Retail. The sector’s challenging landscape amid a shift in consumer buying habits has forced companies to make tough choices. Average weekly hours fell to 29.1 in January from 30.2 a year ago, according to the Bureau of Labor Statistics.
Some of the industry’s major companies, including Macy’s (M), Wayfair (W), Levi Strauss (LEVI), and REI announced job cuts.
Levi Strauss CFO Harmit Singh told Yahoo Finance Live that the company is laying off up to 15% of its workforce as it “pivots” to a direct-to-consumer first model, and develops “a leaner, more agile operating structure.”
So far this year, retailers have cut more than 5,300 jobs, according to a report from global outplacement firm Challenger, Gray & Christmas. The sector is the third highest in layoff announcements in January, after finance and tech.
And those in the leadership ranks are not exempt either. Retail CEO turnover more than doubled in 2023 from the previous year, to more than 50 departures.
Catherine Lepard, who heads the global retail practice at Heidrick & Struggles, warned of “a lot of churn” ahead, as more retailers look to “right the ship.”
While increased job cuts and elevated levels of executive turnover within the retail industry won’t likely spur cuts across the economy or an economic downturn, it does highlight a noteworthy trend. Unprecedented disruption driven by e-commerce and technology is widening the gap between winners and losers, a challenge playing out far beyond the retail sector.
“It’s a matter of the way the economy is changing, and how it changes so rapidly in the digital world,” Morningstar’s David Swartz explained. “The economy has been as tough as it’s ever been because of the pandemic… and nobody has magic solutions to the problems.”
Seana Smith is an anchor at Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Tips on deals, mergers, activist situations, or anything else? Email [email protected].
